MUFG to test real-time blockchain settlement for Japanese bonds worth $1.7 trillion

Mitsubishi UFJ Financial Group, Japan’s largest bank by assets, has launched a proof-of-concept for settling Japanese government bond repo transactions on a blockchain in real time. The project targets a market with outstanding balances of ¥270 trillion, roughly $1.7 trillion, and aims to eliminate the T+1 settlement cycle that currently governs these trades. What MUFG is actually building The proof-of-concept, announced on August 13, focuses specifically on the settlement leg of JGB repo transactions. Think of a repo as a short-term loan where one party sells a bond and agrees to buy it back later, usually the next day. Right now, the cash-and-bond exchange doesn’t happen simultaneously. MUFG wants to change that with what’s called atomic delivery-versus-payment, where the bond transfer and payment happen in a single, indivisible step. The tech stack involves the Canton Network, a blockchain infrastructure developed by Digital Asset, alongside Progmat’s platform and protocols from Secured Finance AG. Three MUFG entities are participating: MUFG Bank, Mitsubishi UFJ Morgan Stanley Securities, and Mitsubishi UFJ Trust and Banking. One detail worth noting: the actual JGBs aren’t being...